Lebec Water District Board Files Embezzlement Report with Sheriff

Image 1 of 4Questioning by the Lebec County Water District board (shown in file photo above) led to a decision to place secretary Michelle Miller Gustafson on investigative leave August 5. Her employment was terminated for inadequate secretarial skills on August 10 at a special meeting of the board. Philip Aaland, the newest member of the board, was helpful in identifying discrepancies. Above, Julie McWhorter, Steve Cozzetto, Darren Hager and Jack Rider all worked to uncover major problems with billing and deposits.

Image 2 of 4Michelle Miller Gustafson (above) took notes in a meeting of the Lebec County Water Board in April. Miller Gustafson was placed on investigative leave August 5. Her employment was terminated for inadequate secretarial skills on August 10 at a special meeting of the board, which had discovered major problems with billing and deposits.

Image 3 of 4Philip Aaland, the newest member of the board, was helpful in identifying financial discrepancies when Miller Gustafson's reports to the board did not seem consistent. Darren Hager asked Antelope Valley Bank for independent verification of the district's account, and discovered alleged misrepresentation by Miller Gustafson.

Image 4 of 4Although she identified herself to the board as Michelle Miller when seeking employment, her Facebook account shows her as Michelle Miller Gustafson. She is married to Greg Gustafson, and is the daughter-in-law of Diane Gustafson, who is secretary to two other water districts, Krista Mutual Water District in Lebec and the Lake of the Woods Water District.

Two special meetings have been held by the Lebec County Water District Board following discovery that cash is missing and deposits have allegedly not been made as reported by a secretary hired in April.

The actions of Michelle Miller Gustafson, daughter-in-law of Diane Gustafson (who works for both the Lake of the Woods and Krista Mutual Water companies) is the focus of an investigation, according to the president of the LCWD board.

The board voted at the Tuesday, Aug. 10 meeting to file a complaint with the Kern County Sheriff’s office. Former secretary Cindy Blomgren is temporarily helping in the office during the investigation. The office will be closed until August 16 “to catch up,” Board President Darren Hager said. He told attendees at the meeting that checks and cash payments have not been deposited as required.

“People were coming into my store [Stage Stop Feed & Mercantile] to complain that their [water company] payment checks had not been cashed yet,” Hager said. An inquiry at the Antelope Valley Bank revealed that the water district’s routine deposits had not been made. Then, on August 5, board members found about “172 checks in a small plastic box at the back of a file cabinet drawer, under a handbag.”

Some of the checks dated back to April and May, but most were from June and July, totaling “a little below $19,000.” Those have now been deposited, Hager said, “But we have 301 customers. Where are the rest of them? Is there a fictitious account somewhere?” he asked. It appears that irregularities have continued for over two months, with customer checks and most cash payments still missing, according to Hager.

“When she [Miller Gustafson] was giving the financial reports to the board, they didn’t seem to be adding up. We’d ask questions and she’d go away and come back with other numbers,” Hager said. Director Phil Aaland checked into the computer accounting system.

“At this time we have found the QuickBooks financial entries are incomplete,” Hager reported. Directors also found several notebooks, one, Hager said, with an entry that said: “once I take over I’m gonna use mom’s billing method,” in Miller Gustafson’s desk.

To help with the investigation, the district requests that customers make xerox copies of all cancelled checks and receipts for cash payments from April 2010 to the present. The district board would like to examine the checks and the receipts and to make them available to law enforcement.

—Pam Sturdevant assisted with this report.

This is part of the August 13, 2010 online edition of The Mountain Enterprise.